Renault-Nissan all set to pip M&M as third largest carmaker

MUMBAI: The Franco-Japanese Renault-Nissan Alliance is set to become the third-largest carmaker by volume in India this fiscal year, replacing Mahindra & Mahindra, as it aims to boost production, encouraged by the success of the Kwid small car and strong export demand.

Renault-Nissan Alliance is working on a plan to increase the output at its Oragadam facility by 70% in fiscal 2017, producing close to 3.66 lakh units, said several people in the know of matter.The factory near Chennai makes vehicles of Renault, Nissan and Datsun brands.

Renault is planning to triple its annual volume to 1.6 lakh units this fiscal year, driven primarily by the bookings for 1.5 lakh Kwid small cars. The newly-launched Datsun Redigo is likely to aid Nissan grow in double digits to 65,000 units in the Indian market. The remaining production is allocated for exports.

Renault-Nissan forecasts India to break into the top three markets for light vehicles by 2020, with an estimated output of 5.5 million units.Based on the internal estimates, the alliance is likely to increase its output to 4.8 lakh units by then if demand sustains.

At the core of this optimism are two new generation modular platforms -the CMF-A and CMF-B architectures which will churn out as much as dozen new products over the course of the next four to five years.

Guillaume Sicard, president of Nissan Motor India and head of the Oragadam plant, said the capacity utilisation will be higher than the Indian average while the output highest among the alliance's factories globally. “The business model is perfect and profitable. We are here to perform on all aspects, be it producing for sister company, producing for exports and also to do well in the domestic market,“ said Sicard.

Analysts said global car makers have finally cracked the code in India on how to create a sustainable operation.

According to them, ex ports will be at the co re of the business, but the test also lies in ma king a breakthrough in the domestic market, with a few cars made specifically for the Indian car buyer.

“Renault has done a good job with differentiated products to build its presence. The question is can they identify more wide gaps in the market to become a multi-product company ,“ said Gaurav Vangaal, senior analyst for forecasting at IHS Automotive. On Nissan-Datsun, Vangaal said, the company always had the “right products“ in the segment which are competitive. “However, they need to get their marketing act right...“

According to one of the four people in the know of the Renault-Nissan plans for India, Renault-Nissan CEO Carlos Ghosn has stated internally that India has the biggest potential for growth in the future.

“Carlos Ghosn agrees that India is a complicated market and one has to learn from experience here and he also knows that once RenaultNissan is able to crack the Indian market, it will ensure success in Africa, South America and the Middle East," said the executive.

Renault-Nissan became yet another global company to start round the clock manufacturing in India recently, thanks to strong exports demand.

The domestic businesses for both brands have been contrasting. While Renault broke into the top five car makers for several months this fiscal year, led by the Kwid, and has already become the largest European car maker in India, Nissan’s fortunes have plummeted despite the launch of entry level car brand Datsun. This had led the company to delay its target of capturing a 5% share of the market by four years to 2020.

Sicard, who travels to Nissan Japan every month, said the headquarters has understood that India was a “very complex market” and that there was a need to realign expectations.

"What took other carmakers 20 years, I am trying to explain to HQ, we could get 10 years to achieve. I am trying to give deeper insight about the country,” Sicard said. “(What) I am trying to promote is: What is India, What is the Indian way. It is hard to understand. I am trying to put a bit of India everywhere in HQ.”